Pension Fund Capitalism: A Causal Analysis

Since 1980, UK individual pension and retirement assets have increased about twelvefold to around 1.5 trillion. Over the same period, US household retirement assets have increased about tenfold to more than US$7 trillion. High rates of asset growth have also been observed for Australia and Canada. Notwithstanding their current high standards of living, countries in much of continental Europe have not shared in these extraordinary rates of growth of pension assets. In fact, many analysts believe that their long-term prosperity is threatened (relatively speaking) by inefficient, institutionally cumbersome finance sectors. While saving now for retirement has significant advantages for beneficiaries, less recognized is the fact that the growth of pension assets in the Anglo-American economies has profoundly changed the financial structure of these countries. In this paper I explain how and why pension assets have grown so large in the Anglo-American countries, beginning with a historical account which helps to identify the reasons why German and continental European countries (excluding The Netherlands and Switzerland) have not shared the same rates of growth in pension assets. In doing so, the paper develops a causal model which discriminates between various causes of Anglo-American pension fund capitalism: structural determinants (institutional framework), second-order determinants (postwar conditions), and third-order determinants (the flow of contributions). The identified causal logic integrates structure with historical and geographical contingency. Implications are also drawn regarding the significance of Anglo-American pension funds for global capitalism.     

MAPPING FINANCIAL LITERACY: COGNITION AND THE ENVIRONMENT

Recent research suggests that regions can be characterized according to their (more or less) financial literacy. One implication is that there may be regional ecologies of finance nested within national institutions and global markets. This article begins by situating behaviour in time and space, linking behaviour to the interaction between cognition and the environment. This is followed by a substantive account of the geographical scale of the “environment” working from the global to the local and in return from the local to the global. By implication, maps of financial literacy reflect the skills and expertise of resident populations, affecting how they sort amongst the relevant information to make effective decisions (which have a material effect on their long‐term welfare). Explaining how and why this is the case is one goal of the article. It is also acknowledged that representing the relationship between behaviour and the environment is conceptually and empirically challenging. Reference is made to new findings about the ways in which people “sample” the world around them, suggesting that cognition and the environment are intertwined in ways that may reinforce existing urban and regional inequalities. In conclusion, implications are drawn for the design and implementation of pension and retirement saving policies.